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Posted on 14 August, 2015, 1 Comment Comments admin
The scheduled Monsoon Session of Parliament has concluded today. Politically, this session was very educative but, frustrating. Parliament represents the best in Indian democracy. ‘Parliamentary paralysis without an issue’ signifies the vulnerability of the system.
The importance of GST need not be overstated. It converts the whole country into one economic market. It facilitates the smooth and seamless transfer of goods and services. It reduces harassment and corruption. It mandates a uniform tax regime. It eliminates ‘Tax on Tax’. It adds buoyancy to tax revenue and has a favourable impact on the GDP. The GST has received consistent support from most mainstream parties. The Congress / UPA government announced this idea in 2006 and it introduced the Bill in 2011. Today, it seeks to go back on the GST. The objections in the Congress Party’s dissent note are contradictory and trivial. The Parliamentary numbers are loaded against the Congress. It, therefore, relies on disturbance and lung power to prevent its consideration by the Rajya Sabha. The Congress is well aware that any delay in passage of the Constitution Amendment which has been accepted by most States will result in at least one year’s delay. That appears to be the Congress’ strategy. National interest is least on its priority.
The Congress party has exhibited that it continues to be enslaved to a family. It is willing to compromise national interest and policy merely because the family is unable to digest its electoral defeat in 2014. India’s loss in this Session is not Congress party’s gain. There is popular disapproval of its policies of ‘disruption without a cause’. The debate in Lok Sabha yesterday clearly demonstrated the hollowness of Congress party’s argument.
The Congress party President, Smt. Sonia Gandhi, hit a new low. It is for the first time that a senior-most leader of a mainstream party has jumped into the well of the House. Even the pretext of stature and dignity was not maintained. As for Shri Rahul Gandhi, there was no serious expectation that he would raise the level of the debate. He has failed to recognise the difference between sloganeering and a Parliamentary speech. The more he grows, the more he immatures. Aggressive body language is never a substitute for substance. It is the NDA Government which brought a tough law against illegal foreign assets. It is the NDA Government which is taking effective steps to bring to book the alleged offender around whom the present controversy is centred.
This Session has educated and enlightened public opinion that India’s economic interests are being held to ransom by the political frustration of the Congress party. India stands educated, though frustrated. The anger emerging out of this frustration will provide India the answer to face this challenge.
Posted on 05 August, 2015, No Comments Comments admin
In response to my blog ‘Dissent or Disruption – The Congress Party’s Position on GST’, I have received a response through a blog “How Congress will block GST” written by my friend Mani Shankar Aiyar. Since he was the leading dissenter on behalf of his party, I have no reason to doubt that he represents the views of the Indian National Congress. Vide this blog, he gives an interesting reasoning for blocking the GST. He claims that alcohol for human consumption is taxed at a very high rate by the State governments. He argues to avoid costly alcohol people resort to ‘hooch’. This results in revenue loss, malpractices and has even led to death of many people caught in the web of illicit liquor. He, therefore, believes that liquor should be brought within the GST instead of leaving it to the taxing purview of the States so that it can be taxed at the constitutional limit of 18% that the Congress party now proposes. Obviously, the UPA’s two eminent Finance Ministers were not struck by the wisdom that Mani Shankar Aiyar possesses. If Mani’s blog is to be believed, Congress party’s position is to make alcohol cheaper so that people do not resort to ‘hooch’. Is this Congress Party’s concept of a comprehensive GST that alcohol becomes cheaper? Is this amongst the basis for Congress Party’s opposition to the GST ?
I hope the Congress party either clarifies its position or confirms Mani’s view.
Posted on 02 August, 2015, No Comments Comments admin
The Report of the Select Committee on the Goods and Services Tax has been submitted to the Rajya Sabha. The Constitution Amendment Bill has already been approved by the Lok Sabha. The Select Committee has recommended a five year compensation to the States which suffer any revenue loss on account of introduction of the GST.
History
The proposal for introduction of GST was first mooted by Shri P. Chidambaram in his Budget Speech for the year 2006-07. After detailed deliberations and negotiations in the Empowered Committee of State Finance Ministers, the 115th Constitution amendment Bill, 2011 was introduced by Shri Pranab Mukherjee, the then Finance Minister. It was referred to the Parliamentary Standing Committee which submitted its report in August, 2013. The Bill, however, lapsed with dissolution of the Fifteenth Lok Sabha.
Thereafter, the NDA Government again held negotiations with the Empowered Committee and after an overwhelming consensus, introduced a bill incorporating certain changes which had also been recommended by the Parliamentary Standing Committee. The near unanimous recommendations of the Empowered Committee, which were entirely supported by Congress ruled States, enabled the preparation of the eventual Bill to amend the Constitution which was introduced by me as 122nd Constitutional Amendment Bill.
Rationale
The rationale of the Bill is to simplify the complex indirect tax structure in the country. The present system involves multiplicity of taxes, absence of uniform rates of taxation, and the cascading effect of “Tax on Tax”. It is also an impediment in the seamless transfer of goods and services across the country. The GST simplifies the indirect tax regime. It seeks to reduce cost of production, inflation, multiplicity of taxes and uneven taxation rates. Significantly, it also creates an eco system for seamless movement of goods and services across the country and cuts down transaction costs. It will broaden the tax base, result in better tax compliance and eventually increase the country’s GDP. The GST resulting in better compliance will improve the revenue of the States and certainly do justice to a large number of lesser developed States in the country. It is for this reason that most State Governments and regional parties are supporters of the GST.
The Congress dissent
The three members of the Congress Party have circulated a note of dissent to what is otherwise a consensus report of the Select Committee. I wish to comment on each of the points raised by the Congress Party in its note of dissent.
(1)The Congress members have proposed that a rate of GST be fixed in the Constitution as not exceeding 18%. This suggestion was not in the Bill proposed by Shri Pranab Mukherjee. When Shri P. Chidambaram negotiated with the Empowered Committee, this suggestion did not exist even then. The rates of taxation are usually not fixed in the Constitution, more so when we live in a dynamic world. The rates have to be recommended by the GST Council depending on various factors such as economic conditions, revenue buoyancies etc. and incorporated in the GST laws. There may be some rationale in the rate recommended by the Congress Party. However, this decision has to be taken by the GST Council and cannot be a part of the Constitution itself. The rates will vary depending on a host of factors.
(2)The Congress has further proposed that the expression “supply” should not apply to goods and services supplied by one unit of a firm to another unit of the same unit of the firm. There was no such proposal in either Mr. Pranab Mukherjee’s bill nor in the proposal approved by Mr. Chidambaram. In any case, GST charged on supply of goods and services would be VATable and not have any cascading effect.
(3)The Congress proposes that the share of local bodies in the revenue buoyancy should be a part of the proposed constitution amendment. This goes contrary to the 73rd Amendment to the Constitution which provided for setting up State Finance Commissions which have the responsibility of making such recommendations. In any case, neither Mr. Pranab Mukherjee nor Mr. Chidambaram had accepted any such proposal.
(4)The Congress has further proposed that a State or a Union Territory with or without a legislature having a population not exceeding twenty lakhs should be given a special status. This was never Mr. Pranab Mukherjee’s or Mr. Chidambaram’s proposal. In any case, the provision for special category approval is based on a host of factors. Congress wants Goa to be a special category state under GST, but Goa has the highest per capita income in the country.
(5)The Congress has further proposed that electricity, tobacco products and alcohol for human consumption should be given the same treatment as petroleum in the Amendment bill. This was not a proposal mooted by any of the Congress Finance Ministers. A consensus with the States would be effectively broken if this suggestion of the Congress is accepted. Petroleum has been included in the GST but the GST would be levied and charged on the product only when the GST Council so decides.
(6) Congress has further proposed that the voting representation of the States in the GST Council, which has been kept at two-third should be increased to three-fourth. This would effectively reduce the centre’s voting power from one-third to one-fourth. This is contrary to the decision that Mr. Chidambaram specifically took on 30.04.2013. The majority required in the GST Council for taking a decision is three-fourth. In fact, the Congress proposal would mean that if all the States get together and decide that the Centre should have a lower GST rate, they could deplete revenues of the centre almost completely. India is a Union of States. Is it the Congress proposal that the Union should cease to economically survive? Is it their proposal that the Centre should have no say in the system of national taxation ? The Congress appears to have made this proposal without adequate application of mind.
(7)The Congress has further proposed that any dispute with regard to GST should be adjudicated by a GST Tribunal chaired by a person who has been a Judge of the Supreme Court or Chief Justice of a High Court. The power of deciding the modalities of adjudication and settlement of disputes in the present bill is with GST Council. Political issues have to be settled politically and not by judges. The original proposal for setting up a Dispute Redressal Tribunal was rejected by the Standing Committee and the Empowered Committee of the State Finance Ministers. The UPA Government accepted the suggestion of the Standing Committee. It is only an afterthought that the Congress has chosen to revive the proposal.
(8)The Congress Party has asked for deletion of a two years transient provision which provided for an additional tax of 1% to be credited to the exporting State. This provision has been added in order to allay the fear of the manufacturing States which felt that they would initially lose some revenue. This is based on a unanimous decision of the Empowered Committee to which all Congress ruled States have agreed.
It was the Congress led UPA Government that proposed the GST in the 2006-07 Budget. The Constitution amendment was piloted by the UPA. The changes suggested by the Empowered Committee and the Standing Committee were accepted by the UPA Government. The present Government has not made any significant modifications to the same except to bring a consensus between manufacturing and the consuming States. The State Governments belonging to the Congress Party have consistently supported the proposal. Is it only out of an obstructionist attitude that the Congress Party has adopted a negative role? Since Parliament is not functioning and there is no way to clarify these points before the same, I am constrained to place the above facts in public domain.
The Congress Party and its leader may be upset with the Government for political reasons. They may be upset with the electorate for the 2014 verdict. The Congress Party should accept and seriously introspect after having ruled the country for the longest period of time, that negativism hurts the country. Should its obstructionist tendencies inflict an economic injury on the country?
Posted on 05 July, 2015, No Comments Comments admin
The release of the Socio-Economic and Caste Census (SECC) on Friday offers an opportunity to reflect upon the strategy for uplifting the lives of India’s poor and vulnerable. While great strides have been made to improve the economic lives of the poor, deprivation of one kind or another is still high: for example, about 30 percent of households encounter at least two out of the SECC’s seven measures of deprivation and 49 percent of households at least one. Improving this situation is the number one priority of this government.
But how can we achieve our objective most effectively and quickly? A permanent, formal sector, well-paid job is the best anti-poverty measure. The SECC reflects this conclusion: out of the seven measures of deprivation, the one that leads to the greatest amount of deprivation is being a landless household that derives a major part of its income from manual casual labour.
The way to eliminate deprivation is to achieve rapid economic growth of 8-10 percent so that good jobs are created for all Indians quickly. That is why the government is promoting investment.
There is an ambitious program to increase public investment in roads, railways, rural infrastructure and connectivity (the SECC shows, for example, that mobile penetration is only about a quarter in rural Chattisgarh).
At the same time, the government is creating the conditions for greater private investment: implementing the GST and creating a common market, reforming the land law, easing the costs of doing business, and unblocking stalled projects are all measures that will improve the conditions for investment.
The latest data suggest that the investment cycle is slowly turning around and stalled projects are being unblocked at a faster pace. Passing the GST and reforming the land law will accelerate this investment turnaround.
To re-inforce the effects of growth on alleviating deprivation, but also to help those that may be left out, we need targeted schemes and policies. The government has been helping the poor by giving them subsidies. But these are poorly targeted and leaky. If we can realize the government’s JAM—Jan Dhan Aadhaar, Mobile—vision we can ensure that money goes directly and more quickly into the pockets of the poor and from the savings we achieve we can put even more money for the poor.
The experience with the DBT scheme in LPG is very encouraging: research by the office of the Chief Economic Adviser shows that about Rs. 12,700 crores (25 percent) will be saved this year from the direct benefit transfer (DBT) scheme. If we can be careful in our design and implementation, we can extend DBT to other commodities, so that the poor get more money to spend for their upliftment.
In addition, we must help the poor by protecting them against risks of various kinds. For farmers, we need to use technology to provide more effective crop insurance to safeguard against weather and other catastrophic risks. For others, especially in the informal sector, we need social insurance against old age, illness and longevity. In the budget a number of social insurance schemes were announced, including the Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Yojana, and Atal Pension Yojana. We intend to strengthen these schemes to encourage further take-up.
Growth or redistribution? Policy reforms or targeted anti-poverty schemes? We believe these are false choices. Both are necessary. Growth and economic reforms help the poor as do targeted schemes. That is the message we draw from the SECC.
The seven deprivation criteria can be seen here: http://www.secc.gov.in/publicdata/staticReportData…#
Posted on 15 June, 2015, No Comments Comments admin
Some friends in West Bengal have asked for greater central assistance to West Bengal. How much does West Bengal get from the Centre?
The impact of the Fourteenth Finance Commission on the finances of West Bengal has to be understood. In the last full year of the UPA Government (2013-14), West Bengal received a total amount of tax devolution, Finance Commission grants and planned transfers of Rs.42029.22 crores. In the first full year of the NDA Government i.e. 2015-16, this amount will be raised to Rs.63578.00 crores. During the period 2010-15, West Bengal received a total tax devolution of Rs.103539 crores. Between 2015-20, this amount will increase to Rs.285200 crores. The following chart indicates the total amount that West Bengal is receiving in the current year as compared to the previous two years:
Further, this year the Centre has some untied funds of Rs.20,000 crores with the NITI Aayog and Rs.15,000 crores which was referred to in para 55 of the Finance Minister’s Budget Speech. West Bengal is likely to get some of this amount. Despite a huge benefit to West Bengal under the Fourteenth Finance Commission, can it at all be said that West Bengal has not gained under the Fourteenth Finance Commission?
Posted on 11 June, 2015, No Comments Comments admin
The Congress Party today had a meeting of the Chief Ministers of the nine Congress ruled States. The Party leadership raised an issue that Congress ruled States have been discriminated against by the Centre. Facts however speak otherwise. The following two charts explicitly make this point. Chart 1 indicates the total tax devolution to the nine Congress ruled States during the period 2010-2015 and the proposed allocation pursuant to Fourteenth Finance Commission for the period 2015-2020. Chart 2 indicates how much the nine States received in the last year of the UPA Government i.e. 2013-14. It also shows the figure after the Fourteenth Finance Commission that each of these States is likely to receive in the year 2015-16. As per the Budget estimates, in addition to the amounts mentioned for the period 2015-16, some of these States may also receive an amount from amongst the Rs.20,000 crores allotted to the NITI Aayog; Rs.15,000 crores surplus available with the Revenue as mentioned in para 55 of the Finance Minister’s Budget Speech. Further amounts would also be allotted to the States for Centrally supported projects of the Railways and the National Highways. A special provision would also be made for Uttarakhand on account of the restoration of the flood affected areas and the Ardh Kumbh.
Posted on 25 May, 2015, No Comments Comments admin
Look back at the situation that existed a year ago before the NDA Government headed by Prime Minister Narendra Modi assumed office. The Government wanted to centralize power in its own hands rather than promote non-discretionary and rule-based governance. “For Sale” signs hung over all Ministries. Spectrum was allocated at throw away prices to the favoured few. Investors lost their investment. Ministers, civil servants, investors were jailed and prosecuted. Coal blocks were allocated at virtually no price. Environmental clearances were up for sale. The Congress Party leaders had become rent seekers and name lenders. They were partners in a large number of companies which got coal blocks allocated. The discretionary and arbitrary allotment motivated by collateral considerations led to prosecutions of many and a virtual paralysis of the coal mines sector. It had an adverse impact on user industries such as the power sector. Even the former Prime Minister Dr. Manmohan Singh was not spared on account of the self-destruct policies of the UPA. The courts had to intervene and cancel the allocations. The mining sector provided for a statutory mechanism of allocation based on the obsolete principle of “first come first served”. The State Governments – some of the poorest in the country – were taken for a ride. They got very little out of valuable resources such as mines in their States. Even gold imports were controlled by a few. This was crony capitalism at its very worst. Businessmen and industrialists lined up to Ministers and party functionaries to seek favours. Chits were regularly issued from party functionaries to Ministers indicating the name of the allottee to be favoured with State largesse. In this chaotic regime, nepotism reached its climax when investigative agencies such as the CBI and the Enforcement Directorate were directly controlled by political individuals. Dubious appointments were made to these agencies. Political opponents and inconvenient business persons were harassed. The agencies whose primary job was to unearth corruption had themselves been corrupted. Courts had to regularly intervene to seek action against the possible guilty. Investing in India inherently included the risk of prosecution. Was it any wonder that investors fled the country? This had disrupted the business environment in the country.
Where do we stand one year later? The whole parade of industrialists lining up outside South Block and North Block is now over. The corridors are empty, the silence cheery. FDI increased from $20.8 billion in 2013-14 (Apr13–Feb14) to $28.8 billion in 2014-15 (Apr14–Feb15). The others are in advance stages of the approval process. The environment Ministry has set up institutional mechanisms whereby clearances based on objective criteria are being routinely granted. The regime of an unlegislated tax on environmental clearances is over. The spectrum auction has fetched over rupees one lakh crores. A few coal blocks being auctioned have fetched over rupees two lakh crores. There is no role of Ministers except in laying down policy. Prices are determined by a market mechanism and the successful bidder is determined by auction. The word “corruption” is being removed from India’s political dictionary. The environment of “prosecute the investors” has been completely reversed. There is a thrust towards reforms and liberalization but no crony capitalism, no harassment. The “scam and scandal, corruption and retribution” Raj is behind us.
With the fiscal deficit contained and Government’s revenues improving, the emphasis is now on strengthening social security and social sector schemes. Over 15 crore Jan Dhan accounts have been opened. An effort is now on to put money in those accounts. Besides, Government schemes for the weaker sections, the LPG subsidy is now being transferred directly to over 12.6 crore beneficiary households. The insurance scheme for accidental death launched on 9.5.2015, in the first nine days, has 5.57 crore policy holders. This scheme involves a premium of Rs.12/- per year. The life insurance scheme involves a premium of Rs.330/- per year and has 1.74 crore subscribers in the first 18 days. The Atal Pension Yojana has been well received. The un-pensioned section of the Indian society will become a pensioned one. The MUDRA bank will assist 5.77 crore small entrepreneurs in raising funds. The distressed farmer has been given relief under the liberalized norms. Additional money has been allocated for MGNREGA. The enhanced resources of the State will be increasingly used towards infrastructure creation, irrigation and social sector schemes. Herein lies the difference between UPA’s crony capitalism and institutional destruction and NDA’s liberalization and anti-corruption, combined with an emphasis on both strengthening institution building and social security for the poor and vulnerable.
Posted on 14 April, 2015, No Comments Comments admin
On Friday, the 10th April, 2015, along with Chief Minister of Gujarat, I inaugurated “Gujarat International Finance Tec-City” popularly known as the Gift City. The Gift City is intended to be a global financial hub. It will have an international financial service centre which is a financial sector SEZ.
The Gift City, a joint venture company, has been promoted on a 50:50 basis by the Gujarat Urban Development Company Ltd. and the Infrastructure Leasing and Financial Services Limited (IL&FS). It is at a twenty minutes drive from the Ahmedabad airport and five minutes drive from Gandhinagar, the capital of Gujarat. It is currently spread over 800 acres of land which has been contributed by the Gujarat Government for a nominal amount of Rs.1/-. The joint venture company has developed world class infrastructure. The municipal facilities by a statutory notification will be looked after by the company. All infrastructural facilities are located underground. There is an underground tunnel in which electric wires, pipelines, garbage collection and all other maintenance facilities are located. The tap water in the city itself is purified to become drinking water. The air conditioning is maintained through water chillers. The infrastructural tunnel is big enough for a vehicle to drive through it. The joint venture company has already put up two towers. The first phase of the city is to be completed in 2016. The entire city would be completed in three phases concluding with 2026.
All financial sector activities, which include banking, insurance, capital market operations, intermediaries from all over the world, are going to be located in the city. Both Central and the State Government have announced several tax cuts for the international financial sector. RBI, SEBI and the IRDA have already announced their regulatory mechanism for the financial sector operations. The operations will include all financial sector companies which include all international techno park, international market zone, commodities exchanges, global trading exchanges, insurance, shares, banking IT, KPO and BPO services and data centre etc.
The related services will include commercial and office buildings, serviced apartments, hotels, restaurants, food courts shopping arcades medical centres, schools, colleges, exhibition centres and affordable housing. It will generate thousands of jobs with all working people with families staying in the complex itself. It will be a self-contained city.
I was informed in the course of my briefing prior to the inauguration that land has been leased out to each financial institution and other developers for just a token amount. The joint venture company would be paid Rs.1250/- psf for commercial development and Rs.250/- psf for each social sector development. This will account for the initial investment made by the joint venture company, the cost of land and result in a net savings to the joint venture company. Effectively this will be a smart city with global infrastructure, a financial centre, with people living in there. This is achieved with no cost to the public exchequer. This was perceived when Prime Minister Narendra Modi was the Chief Minister of Gujarat. The entire initiative comprises of creating a social sector SEZ in a smart city. For creation of smart cities in other parts of the country, this experiment deserves to be emulated by others. Different State Governments would be well advised to send their teams to study this success story.
Posted on 04 February, 2015, No Comments Comments admin
Some disillusioned members of the AAP have taken up the case of the party’s dubious funding. The AAP is a brilliant propagandist. It claims to wear the label of honesty on its sleeves. It disclosed the names of a large number of corporate entities from whom it received donation by cheque. The disillusioned AAP members appear to have conducted a search of these with the Registrar of Companies. The search uncovered the curious character of the donor companies.
The companies do not do any business. They have no profits from any legitimate business. They are “Entry lending companies”. The functioning of these “entry lending companies” is very simple. At times there are a large number of inter-connected companies created through a multi layering process. Money is got transferred from one to another. The companies are registered at obscure addresses. The directors of these companies are unknown people, usually name lenders for a miniscule consideration. These directors are usually low paid employees of those behind the racket. These companies are used either for hawala payments or round tripping of their own funds. They convert cash into cheque.
Most of these ingredients are present in the case of the companies which are donors of AAP. Surely, when a company donates lakhs and crores to a political party, the party would attempt to know as to who the controlling interest behind these companies are? The only fact that the donations have been made by cheque does not purify the transaction. Withdrawal from Swiss bank accounts can also be made by cheques. Where a political party converts black money into white, its receipt would obviously be by cheque. That cannot wash away the sins of the convertor or the recipient since the entire transaction is fraudulent and a tax evasion exercise. Arvind Kejriwal is not a novice to India’s taxation laws. He is a former officer of the Indian Revenue Service. He knows very well that such transactions are dealt with under the Income Tax Act and not the Indian Penal Code. Why does he then dare the Finance Minister to arrest him? Is it only a bluff and bluster exercise? A company can donate a maximum of 7½ (seven and half) percent of its average net profit of the three preceding financial years to political party. Did the recipient Aam Aadmi Party verify this fact? Did it verify the controlling interest behind these companies? Can it even now tell us who was the individual who brought these donations and whether he had the financial resources to pay or was it a round tripping of its cash available?
If Kejriwal were still a Revenue Service officer and a case of such money conversion through sham companies resulting in donations to a political party had landed on his table, what he would have done? Would he have asked the assessee to write a letter to the Chief Justice of the Supreme Court of India or allowed him to argue that a payment by cheque to political parties forgives all sins of black money conversion? Would he have arrested the fraudulent assessee under the Indian Penal Code rather than proceeding under the Income Tax Act? Surely Kejriwal is not a stranger to the tax laws. He knew what his party was doing. He should be honest enough to tell the people what “Arvind Kejriwal, IRS” would have done under these circumstances?
Posted on 28 January, 2015, No Comments Comments admin
The World Economic Forum’s Meet at Davos was one with a difference. India had the second largest contingent next only to that of the United States. For the past few years serious doubts had been expressed about India and its economic potential. It was placed as a member of the “fragile five”. “I” was in danger of falling off from the BRICS. Both within and outside India there was despondency. This year the environment was entirely different.
After 30 years the Indian electorate had voted a Government with a single party majority. India’s Prime Minister was being described as a strong, decisive and a pro-reform leader. The four important ordinances relating to land, insurance, coal and mining have demonstrated India’s determination towards reforms. Investors were looking at India with greater enthusiasm. The India focussed meetings were over-attended. Many who wanted to register for these meetings were disappointed at the fact that they could not get entry. Government leaders, policy makers, heads of major corporations were engaging with India. Our own industrialists were attending the conferences with a renewed sense of confidence with their heads held high.
The optimism was, however, tempered with caution. Will India be able to deliver what it has promised? Will all these ordinances translate into law? Will the obstructionists be able to derail India’s march? Many questions centered around this skepticism.
President Barack Obama’s visit to India has helped forge a new commercial relationship with India. The conclave of Indian and American CEOs exhibited a strong confidence about India. The desire of American businesses to invest in India was great. Their queries related essentially to the ease of doing business in India. With the American economy growing stronger, US corporates are flush with funds looking to invest elsewhere. India appears high on their agenda.
Both internal and external factors favour India. The United States is undoubtedly the principal engine of global economic growth. Its growth rate is moving up. Brazil, South Africa and Europe are facing challenges. China has realistically accepted that 7 per cent growth rate is their new normal. The IMF considers this figure as more than normal.
The oil price decline has favoured India as a net buyer. With a reform oriented Government in place, India’s policy to move upwards in near future is rated high. States are competing with each other for higher growth. Shri N. Chandrababu Naidu and Shri Devendra Fadnavis, Chief Ministers of Andhra Pradesh and Maharashtra were aggressively marketing their states for investment in Davos. India needs more resources. Our domestic resources are not adequate. The cost of our capital is high. The world is looking to invest. There are not too many options which are more attractive than India. Whereas most competing economies are facing serious challenges, India is promising to accelerate its growth. Hope has revisited us. We cannot allow obstructionism or complacency to squander this opportunity. This is a loud and clear message from Davos.